The Gap Inc. (GPS): Brand Breakdown

The Gap Inc. (NYSE:GPS) continues to widen the gap between with other retail giants. With a recent corporate restructuring and high cotton prices, The Gap Inc. (NYSE:GPS) has creatively overcome challenges with solutions that work. With stiff competition from giant online retail stores such as Amazon.com, Inc. (NASDAQ:AMZN), Gap and other retail stores are having to innovate efficiently to keep up with the changing market.

Brand breakdown

In 2012, The Gap Inc. (NYSE:GPS) decided to recreate its brand management structure under a long-term growth plan. This plan allows multiple brands to scale across streamlined channels while pushing into international markets that are fashion-hungry. As Gap continues to look for new growth opportunities, there are several markets which will maximize returns over the long haul. China, Brazil, and Japan each have a different target market, and with new branding structure, brands are targeted efficiently to maximize profit within each country.

Splitting up each country by brand maximizes effective growth in emerging markets. China spends billions of dollars on apparel while Japan is more focused on value. With each brand divided across the globe, The Gap Inc. (NYSE:GPS) has a breakdown model to scale in these developing markets.

Efficient supply chain model

In the age of digital, consumers are shopping online more than ever before. With rising online demand, The Gap Inc. (NYSE:GPS) is striving to make the best use of perishable inventory. With expiring seasonal merchandise, the new supply chain model makes use of inventory sitting in stores as well as maintaining a lean supply chain. Instead of products sitting on the shelves, this efficient method uses sitting inventory to fulfill online purchases and increase operating margins.

Specialty markets

With specialty chains like Piperlime and Athleta, The Gap Inc. (NYSE:GPS) hopes to capture specialty markets as well. With niche markets growing at a rapid pace, Gap hopes to cash in on new and emerging markets in North America, as well as gain market share in international markets.

Lululemon Athletica inc. (NASDAQ:LULU) has cornered the yoga apparel market well. With previous quarter’s revenue increasing 31% to $485.5 million and same-store sales increasing 10% on a constant dollar basis, Lululemon Athletica inc. (NASDAQ:LULU) has increased stores and market share in rough economic times while maintaining unusually high operating margins. Even with the recent news of quality control errors, the share price has bounced back and continues to dominate the yoga apparel industry.